Zentropa Files Complaint against DFI

Zentropa has released the following criticising the DFI’s decision to impose stricter requirements for Zentropa receiving subsidies:

Zentropa hereby files a complaint concerning DFI’s decision to set stricter requirements for Zentropa when Zentropa receives film subsidies in the future.

Zentropa notes, first of all, that we fully recognise the role of DFI in film subsidy cases. As part of its case handling, DFI must approve budgets, cost reports and accounts, and in this respect has access to ask questions concerning and to check material received. Zentropa also notes that we have produced more than 200 films and received support from DFI and other public providers of support, as well as private investors, for more than 20 years. Zentropa is probably the production company in Denmark that has the most experience with applying for film subsidies from DFI, and we are thus also the production company that in recent times has most often been subject to case processing and control by DFI and by other authorities and auditors. Zentropa has always participated constructively, openly and in close cooperation with its partners, including DFI, in these processes.

It is therefore extremely regrettable that, several times during the process, Deloitte and DFI have said and written that Zentropa has ”obstructed” the investigation. This is not correct. Together with the Danish Producers Association, Zentropa has questioned the legal basis for the investigation, and we wished this matter to be clarified. Secondly, Peter Aalbæk Jensen was on sick leave with cancer for a period, when we wished to postpone the process, since certain overall decisions of principle had to be considered by Peter Aalbæk Jensen. Neither DFI nor Deloitte showed any particular understanding of the sick leave and/or the wish to postpone the process, which presented some problems for us.

On 26 May 2014, Zentropa received decisions from DFI based on the audit review of four film productions: ”Den du Frygter”, ”Mor Byttes”, ”Hævnen” and ”ID:A”. The decisions were made on the basis of a report prepared by Deloitte dated 8 April 2014. The four films were produced in the years 2008-2010 and the production accounts for the films were audited by JS Revision and endorsed without qualification and were, at the time, approved by DFI after thorough review.

DFI’s decisions state that ”no misuse of subsidy funds has been revealed” in conjunction with the production of the films, just as the decisions state that the ”level of costs and distribution of the costs on the [films] is not unusual in relation to comparable productions”. Furthermore, DFI has notified that there is no basis to require repayment of the film subsidies granted.

Nonetheless, DFI has decided that, until further, Zentropa will be subject to stricter supervision when we receive film subsidies. DFI has used the word “undertaking” instead of “decision”, but this does not change the fact that DFI has already decided that until further Zentropa is to be treated more strictly than before, and more strictly than other producers, when we receive film subsidies in the future.

We are surprised that, before the decisions were taken, no letter was sent stating which decision DFI intended to make, cf. Section 19 of the Danish Public Administration Act. Via access to consultation, Zentropa would then have had the opportunity to submit its comments concerning the planned decisions. Thereafter DFI would have taken the final decisions, which Zentropa would then have been able to bring before the Ministry of Culture as the appeal body.

Access to consultation concerning a decision that has already been taken is illusory, and the consultation will be even more illusory since the body, the Ministry of Culture, that is to decide any appeal, gave the report/decisions its stamp of approval just two hours after the publication of the report/decisions. The suspicion arises that this concerns decisions that were agreed in advance between DFI and the Ministry of Culture, which thus short circuits the entire appeal system, into the bargain.

Zentropa also notes that when DFI in March 2014 accepted that Zentropa could have access to a provisional version of Deloitte’s report, Jacob Buhl Vestergaard wrote, among other things, in a mail to Zentropa dated 12 March 2014 that: “A decision from us will be subject to formal consultation. But the report must be final first, and here we have in fact opted for a pre-consultation with you, to ensure the best possible factual basis.” Already on 12 March 2014, it seems that DFI had decided that the reaction to the report would be adverse for Zentropa. This means long before the report was final, and before Zentropa had had the opportunity to correct factual mistakes. In the mail, DFI also inferred that DFI wished to take a decision on the best possible factual basis. Nonetheless, DFI has not altered its conclusion, even though Zentropa documented several factual errors in Deloitte’ provisional report and even though Zentropa has pointed out DFI’s own responsibility for Zentropa’s practice and procedure for determining market prices over many years.